Consolidation vs. Merger of companies ?

Hi DMS Attorneys in Vietnam! Could you advise me differences between consolidation and merger of enterprises ?

Hi!

Consolidation of enterprises

Two or more companies (hereinafter referred to as companies being consolidated) may be consolidated into a new company (hereinafter referred to as the consolidated company) and at the same time, terminate the existence of the companies being consolidated.

Companies being consolidated shall cease to exist after enterprise registration. The consolidated company shall assume the lawful rights and interests and be liable for unpaid debts, labor contracts and other property obligations of the companies being consolidated (Clauses 1, 5 Article 194 Law on Enterprises No. 68/2014/QH13 dated 11/26/2014).

Merger of enterprises

One or more companies (hereinafter referred to as merging companies) may be merged into another company (hereinafter referred to as the merged company) by way of transfer of all lawful assets, rights, obligations and interests to the merged company and, at the same time, terminate the existence of the merging companies.

After enterprise registration, the merging companies shall cease to exist; the merged company shall assume the lawful rights and interests and be liable for unpaid debts, labour contracts and other property obligations of the merging companies (Clause 1, Point c Clause 2 Article 195 Law on Enterprises No. 68/2014/QH13 dated 11/26/2014).

Therefore, a merger may be understood as a process in which a company takes over another one. On the other hand, a consolidation shall create a completely new corporation.

Related topics:

Acquisition of an enterprise, buying a business in Da Nang

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Difference between Consolidation and Merger of companies